There are a ton of metrics you could be watching for your fundraiser. But here are 11 that are extra important!
Setting SMART Goals Means Measuring
In our white paper on setting SMART goals for your fundraising, we talk a lot about why having goals you can actually measure is so important. This post goes through some important metrics and the formulas used to calculate them.
So once you set your SMART goals for fundraising, use this post to figure out how to measure some of your success.
And make sure to download the infographic here, which is an easy cheat-sheet to keep up with all of the formulas discussed in this post.
Why Fundraising Metrics Matter
You know that you can't just do things and hope they work. You've got to strategize, plan, monitor, review, and repeat (with the things that work and don't repeat with the ones that don't.) Otherwise, how will you ever know if you are growing? Metrics matter, but only when you are measuring the right ones. This list will get you started.
P.S. you can use these metrics to measure whatever time you want: year over year, month over month, etc. The end of the year and the mid-way point are good times to evaluate, but not the only times you should be calculating.
As we discussed in last month's infographic, the annual overall giving in America keeps going up and up!
But does this stat hold true for your specific organization?
Make sure you can answer this question. In order to figure out the rate that your organization is growing (or decreasing), just take the total you raised in the timeframe you are measuring and subtract the amount that you raised in an identical timeframe before. So, you could measure this year to the previous year. Or last month to the month before that. Or first quarter to second quarter. And on and on.
Divide that by the former timeframe's total and then multiply by 100.
Let's look at an example as if we wanted to compare 2016 to 2015.
So lets say that you raised $500,000 in 2015 and $600,000 in 2016. Your rate of growth would look like this:
((600,000 - 500,000)/500,000) X 100.
For this one, I'll walk through my math here. After this, I'll just show the formula and answer for the examples I give.
Formula: ((2016 TDR - 2015 TDR)/2015 TDR) X 100
2016 TDR: 600,000
2015 TDR: 500,000
- ((600,000 - 500,000)/500,000) X 100
- 100,000/500,000 X 100
- 0.2 X 100
So you had a 20% growth rate from 2015 to 2016.
Alternatively, had you raised $500,000 in 2015, but only raised $400,000 in 2016, you would have seen this equation:
((400,000-500,000)/500,000) X 100.
Which equals -20. So your growth rate would have been -20% last year.
Then again, maybe you want to measure January-June of 2017 to January-June of 2016 - just to make sure you are on track to increase your growth this year.
You'd just say in the first half of 2016, you raised $250,000. The first half of this year you raised $350,000.
((350,000 - 250,000)/250,000) X 100 = 40. So you had a 40% growth rate from the first half of this year compared to the first half of last year.
So let's say your goal for the year was to increase your growth by 50%. In that case, 40% may not be where you want to be, and so you may want to think about adjusting things now. However, perhaps your goal was to increase by 25%. In that case, 40% might mean you are doing better than expected!
The next few points are important on their own, but are also going to help us figure out some other metrics later on. Let's start with the average gift size.
This one is super easy: just take the amount of donations you actually received, and then divide it by the amount of gifts you received. So, if you had a total donation revenue of $5000 last month, and you got that money through 500 different gifts, then you can say that the average gift size was $10.
TIP: Track Over Time
I want to really spotlight this next point:
You don't just want to track every now and then, or even just once a year. Most of these metrics are good to know monthly, quarterly, at the mid-way point, and yearly.
For starters, it is because while numbers and calculations are great to know, they can be skewed.
Let's imagine you are tracking the average size of your donations, and you look at June of 2017, when you got five individuals gifts. This is what you see:
If you were to run the numbers, you'd see that your average gift size is $230! That's impressive. But does it truly show the state of your organization?
Sometimes that bigger than average - but not steady - donation can make your numbers seem better than they are. (And one bad timeframe could also make you look like you aren't doing as well as you are.)
Consistent tracking helps you eliminate these issues.
The frequency of donations metric refers to the amount of times an individual gives to you.
There are two real ways to look at this:
Individual and Average.
At the individual level, you are looking at specific people and figuring out how often they have given to you. Bob Smith has made five donations in the last two years. This can help you send the right marketing message to Bob.
However, what we are focused on right now is the average frequency with which your donors are giving. And for that, you need to take the amount of gifts you have received and divide it by the number of donors you have had.
You received 75 different gifts in the time you are measuring, but you only had 25 donors in that same time? Then your average donor gave three times in that period.
Metric 4: Donor Churn and/or Donor Retention
Donor churn and donor retention are two sides to the same coin. If you look at both of these numbers, they should, theoretically, add up to 100%. That is because donor churn has to do with the donors you are losing and donor retention has to do with the donors you are retaining.
You should know these numbers, but it may only be important for you to keep up with one or the other - though having both makes it easier to double check yourself. Plus, you'd be ready for a board who might ask for one or the other (or both.)
Let's look at both metrics separately.
Donor churn refers to the amount of donors you lose over a set time.
It's important to remember that this number can be flawed. For example, if you are looking at year over year numbers, you might miss people (or companies) who donate every other year.
If you consistently take these possibilities into account when you are (hopefully) regularly looking at this number, you can see a lot about how you are doing.
To find your donor churn, just take the amount of donors you lost in the set timeframe (a year is good for this one) and divide it by the number of donors you had in the timeframe before. Then multiply by 100.
For example, let's say you had 250 donors in 2015. However, 123 of those did not donate again in 2016.
So, that formula would look like this:
(123/250) X 100
Which would equal = 49.2.
So, your churn would be 49.2%.
Donor retention is the exact opposite - and it's a lot less depressing to find.
Instead of looking at the percent of donors you are losing, you are looking at the percent of donors you are keeping.
Once again, you need to take these numbers with a grain of salt. Maybe your second year numbers are high, but your third year numbers are awful. That is why it is a good idea to continuously monitor this number year after year.
To find your donor retention rate, simply do the same thing you did to find donor churn, but instead of using the number of users you lost in that timeframe, put in the number of donors that came back.
So, let's use the same numbers from the last example. In 2015, you had 250 donors. However, 123 did not donate in 2016. That must mean that 127 donors did return.
So now we can use this formula:
(127/250) X 100 = 50.8.
So your retention rate from 2015 to 2016 was 50.8%.
TIP: What to Track
Along with when to track, you need to think about what to track.
I don't mean which metrics (though those are important too, or what is the point of this whole post?), but what numbers to use when you use these metrics.
Tracking these fundraising metrics across all of your totals is a great way to get an overview of how your organization is doing, but measuring the same metrics across specific channels can really help you see where you are strong and where you need to improve.
The Donor Lifetime metric lets you see the average amount of years a donor stays with you. The formula itself is not that difficult to use, but you may need to use an Excel sheet or other computer program to help you figure it out.
All you need to do is divide the cumulative amount of years you have had donations with the amount of donors you have had.
Let's break this down into easy numbers just to see how it works:
Let's say your organization has been around for two years. In that time, you had 5 donors total - and all 5 gave to you two years in a row.
Now, it is easy to just see that - at this point in time - the average lifespan of your donors is 2 years.
But let's look at it in the formula:
Each of your donors has given to you 2 years. That means 2+2+2+2+2, which equals 10. So cumulatively, that's 10 years. Now, just divide 10 years by 5 donors, and you get the average donor lifespan of 2 years.
Your numbers are likely not going to be so straightforward. That's okay. That's what technology is here for! Try to do this formula with a spreadsheet or another computer program in order to make sure you get it done correctly.
Metric 6: Upgraded Donations
This one is so simple, you don't need to worry about getting a formula and having to do more math. That's why it is listed in the middle of this post - to give your brain a short break.
As your donors' support of you grows, you hopefully hope the donation amount grows too. Maybe a donor started out giving you $10 gifts here and there, but now is giving you $100 gifts at the same frequency, as they get to know you and your cause.
Hopefully, you are tracking these upgrades. You may need a spreadsheet for this, but you shouldn't need to do much math on your own (because this would be tedious to do on its own):
Make sure you check out the number of donors you have whose gifts increase from year to year.
And if you want, you can even track the increase across years to make sure you are consistently growing.
TIP: Don't Do These on Your Own
If the idea of sitting down and doing math sounds horrible to you - it does to us too - then don't try to do these by hand.
It is good to know how to do these - and it is very important to make sure they get done. However, there is no reason that you can't take advantage of modern technology in order to keep all of these from getting too much to handle.
Use spreadsheets and other tools - including whatever you use for donor management - to keep all of this information in an easy to manage manner.
Metric 7: Subscription Gifts
Similar to the above, you want to watch to make sure that your subscription growth rate is also rising. This one technically does have a formula - unlike point 6 - but it is very similar to one we have already covered:
Rate of Growth!
For subscription gifts, you can measure it in at least two different ways:
- The amount of subscriptions you are getting.
- The total donation revenue you are getting from subscriptions.
One is a little different formula than the equation you already learned, but two is almost identical.
As a reminder, the rate of growth formula is the the Total Donation Revenue (TDR) from the current timeframe minus the TDR from the previous timeframe divided by the previous TDR and multiplied by 100.
So let's start with the formula for method one.
Number of Subscriptions
So, for example, let's say you had 25 different subscription in 2015. In 2016, that number grew to be 35. You equation would look like this:
((35-25)/25) X 100 = 40. So your subscription rate grew by 40%.
Subscription Revenue Growth
So let's pretend the 25 subscription you got in 2015 in the above example amounted to $7,500 - which would be the case if all 25 did a $25/month gift. In 2016, though, you got a couple of $50/month gifts and added some more subscriptions, so you ended up with $13,500 from your subscription gifts.
Your equation would look like this:
((13500 - 7500)/7500) X 100 = 80.
So your subscription revenue rate of growth was 80%.
Metric 8: Donor Lifetime Value
Donor lifetime value is a good metric to know because it helps you predict how much you raise from your average donor before they churn. This also helps you decide on how much you spend/can spend on donor acquisition.
There are multiple ways to calculate DLV, so let's focus on two. Both of these will use numbers from metrics we have already discussed above:
1. Take your average annual donor amount (average gift size) and your attrition rate (retention rate before multiplying by 100).
Then, divide the average annual donation by the attrition rate.
So, if your average gift size is $100 and the attrition rate is .8, your formula would look like this:
100/0.8 = 125.
So the average donor lifetime value would be $125. (Which means you'd really want to make sure that it wasn't costing you $150 to acquire a new donor!)
The second method is a little more complicated, but can get you more accurate results.
On this one, you need to know a few metrics - all of which have been discussed above. So, take all of the following:
- Donor Lifespan
- Average Donation Amount
- Average Frequency of Donations
Now, multiply lifespan by average donation by average frequency.
So, let's say that your average donor lifespan is 3 years and your average donation amount is $100. Plus, your average frequency is 2.
This would be your equation:
3 x 100 x 2 = 600. So your DLV would be $600.
TIP: Other Things to Measure
There already seems like a lot on this list, but it isn't exhaustive! There are tons of other metrics you can measure on top of these. What is important to you (or to your board) may be a little different to some other organization.
Once you have mastered the metrics in this post, think about tackling some others. Here are some examples:
Metric 9: Repeat Donors and New Donors
Along with your total donors, you should keep track of how many repeat donors you have and how many new donors you are acquiring.
It actually costs more to obtain new donors than to keep getting gifts from your past donors. So while you want to see your new donors rising, you also want to make sure you are maintaining a steady percentage of repeat donors while you are at it!
The good thing is is that the formulas for these two metrics are pretty much the same. So you don't have to learn too many more formulas in order to track it.
There are a lot of ways you can measure these numbers, and for the most part, all you need is the formulas we've already discussed above - and just substitute your repeat or new donor numbers in.
- For starters, you should know how many repeat or new donors you have in a given timeframe. This is an easy number to calculate, and all you have to do is look at your database.
- You may also want to know any of the metrics already discussed here, but relative to new or repeat donors. If that is the case, just substitute the numbers you have for repeat or new donors into any formula asking for total donors.
For example, let's say that you want to find your growth rate for new donors from 2015 to 2016.
The growth rate formula for all of your donors was this:
But since you are only looking at new donors, you would change any place that said Total Donation Revenue to New Donor Revenue.
So, if you received $6500 from new donors in 2015, but you made $8500 in 2016, you'd figure out your new donors rate of growth with the following formula:
((8500-6500)/6500)) X 100 = 30.769.
So, your rate of growth for new donor gifts from 2015 to 2016 was 30.769%.
You can do this for any formula in this infographic and for repeat donors as well.
Metric 10: Donor Acquisition Cost
Here is an easy one for you (but one that is insanely important to know):
How much is it costing you to get a new donor?
The donor acquisition cost lets you see how much you are spending on marketing, fundraising, and everything else related to donor acquisition, and compare it to how effective it is being in bringing new donors to you.
Remember that Lifetime Value number you calculated above? Let's pretend you have figured that the LTV of your donors is $10,000. But now lets say you find the donor acquisition cost, and it's $11,000. See the problem?
You never want to spend more money to gain donors than you make on average from gaining them.
All you have to do for this one is take how much you spent on acquiring new donors in the timespan you are measuring, and then divide it by the number of new donors you actually acquired in that same timespan.
Spent $100 and got 10 new donors? Then your DAC was $10. Easy!
TIP: How You Doing?
It's great to compare yourself to years or months past, but sometimes you just want to see how you are doing in comparison to everyone else.
So, to help you see how you are doing, take a look at your metrics that you figured out above, and compare them to some averages across nonprofits and organizations.
(And, P.S., you may want to find these same averages for your specific industry.)
Metric 11: Number of Gifts Given
The last metric we are going to look at is total gifts given in a set time frame. There is no formula to know here. You just want to keep track of how many gifts you receive time over time.
This way, you can make sure that you are building and growing in any given timeframe.
There are tons of other metrics you might want to watch too, but I feel like 11 is a good number to start with.
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